| Mon 26 Mar 2007, 8:59 | | SNT/ SNM - Santam Limited - Scheme of Arrangement |
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SNT
SNT
SNT/ SNM - Santam Limited - Scheme of Arrangement
Santam Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/001680/06)
JSE share code: SNT
NSX share code: SNM
ISIN: ZAE000006854
("Santam")
Announcement in respect of a scheme of arrangement between Santam and its
shareholders
1. Introduction
Pursuant to the announcement on SENS on 27 February 2007 and in the press on 28
February 2007, shareholders are advised that Central Plaza Investments 112
(Proprietary) Limited ("BEE SPV Co") is proposing a scheme of arrangement in
terms of section 311 of the Companies Act (Act 61 of 1973), as amended (the
"Companies Act") between Santam and its shareholders, other than its wholly
owned subsidiary, Guardian National Insurance Company Limited (the "Santam
Subsidiary"). BEE SPV Co will acquire an aggregate of 10% of Santam`s issued
ordinary shares, other than those held by the Santam Subsidiary, on a pro rata
basis, for a consideration of R82 per Santam share (the "scheme").
BEE SPV Co is a special purpose vehicle incorporated specifically to acquire the
shares obtained under the scheme, for the benefit of the following entities:
- 26% for the benefit of the Santam Black Economic Empowerment Staff Trust, the
beneficiaries of which will be qualifying black Santam staff;
- 25% for the benefit of the Santam Broad-Based Black Economic Empowerment
Community Trust, the beneficiaries of which will be various broad-based black
communities; and
- 49% for the benefit of the Santam Black Economic Empowerment Business Partners
Trust, the beneficiaries of which will be qualifying black strategic business
partners of Santam.
2. Rationale for the scheme
Santam is firmly committed to black economic empowerment ("BEE") in South Africa
in order to achieve the constitutional right to equality, to increase broad-
based and effective participation of black people in the economy and to achieve
more equitable income distribution. Santam accepts that meaningful participation
by black people in the mainstream economy is essential to sustaining South
Africa`s successful economic and democratic structures.
The Santam broad-based BEE ownership initiative to be implemented by way of the
scheme is designed to:
- ensure that a meaningful portion of Santam`s equity is owned by black people
and that black people have a meaningful role in Santam`s operations, management
and development;
- benefit qualifying black employees and strategic business partners of Santam
and enable them to participate, at ownership level, in the future growth of
Santam;
- be truly broad-based, thereby providing for the upliftment of black people;
and
- provide a relevant shareholder group with the capability of adding value to
Santam.
Santam supports the sector-wide commitment to BEE as embodied in the Financial
Sector Charter and the Department of Trade and Industry Codes of Good Practice
as gazetted on 9 February 2007. The scheme, together with other Santam
initiatives has been implemented with the intention to meet and surpass BEE
ownership requirement directives that have been issued to date.
3. Terms of the scheme
3.1 Scheme mechanism
In terms of the circular posted to Santam shareholders on Wednesday 7 March
2007, Santam has made a pro rata voluntary offer to repurchase up to 10% of
Santam`s issued ordinary shares from all Santam shareholders at a price of R102
per Santam share (the "repurchase offer").
To the extent that Santam shareholders` acceptances of the repurchase offer
exceed 10% of the issued ordinary shares of Santam, Sanlam Limited ("Sanlam")
has made an offer to acquire the excess shares tendered at the same offer price,
subject to Sanlam`s shareholders` funds not holding more than 80% of Santam`s
issued ordinary shares thereafter (the "Sanlam offer").
In terms of the scheme, BEE SPV Co will acquire 10% of Santam`s shares following
settlement of the repurchase offer and the Sanlam offer from all shareholders of
Santam who are recorded in the register on Friday 18 May 2007 (the "record
date"), other than the Santam Subsidiary ("scheme participants").
Following implementation of the scheme, BEE SPV Co will be the registered holder
of 10% of the issued shares of Santam, excluding those held by the Santam
Subsidiary.
3.2 Scheme consideration
Scheme participants will receive R82 in cash for each Santam share disposed to
BEE SPV Co pursuant to the scheme.
3.3 Scheme suspensive conditions
The repurchase offer and the Sanlam offer are expected to close on Friday 20
April 2007. This date is however subject to change to a later date as will be
announced by Santam.
3.3.1 If the repurchase offer becomes unconditional and is settled:
- before or on Monday 23 April 2007, the scheme voting record date will be
Tuesday 24 April 2007 and the scheme meeting will be held on Thursday 26 April
2007; or
- later than Monday 23 April 2007, the scheme meeting will be postponed and
Santam will announce a new scheme voting record date and scheme meeting date.
3.3.2 If the repurchase offer has been settled by Monday 23 April 2007 but the
Sanlam offer has not been settled:
- the scheme voting record date will not be affected;
- Santam shareholders who have tendered shares in excess of the shares acquired
by Santam pursuant to the repurchase offer (and whose shares are therefore
subject to the Sanlam offer) will:
- not be entitled to exercise any voting rights at the scheme meeting attached
to the shares acquired by Santam in terms of the repurchase offer;
and
- be entitled to exercise all voting rights attached to the shares which remain
subject to the Sanlam offer at the scheme meeting and will be able to appoint
any director or officer of Sanlam (or his/her nominee) as their proxy to
exercise the relevant voting rights at the scheme meeting in the manner
prescribed by them.
3.3.3 Santam will only make application to Court for the sanctioning of the
scheme:
- following settlement of the Sanlam offer; or
- in the event that the Sanlam offer has lapsed by 31 May 2007 (or such later
date as may be agreed between Sanlam and Santam and announced by them), as soon
as reasonably possible thereafter.
3.3.4 The scheme consideration record date will be a date after the settlement
of the repurchase offer and after settlement (or lapsing) of the Sanlam offer.
Therefore, shareholders who have tendered shares pursuant to the repurchase
offer and the Sanlam offer will participate in the scheme, and receive the
scheme consideration, in respect of 10% of the balance of their shareholdings
after settlement of the repurchase offer and the Sanlam offer.
3.4 Funding of the scheme
The funding required for BEE SPV Co to make the acquisition in terms of the
scheme will be provided as follows:
- senior funding of up to R450 million will be provided by Sanlam Capital
Markets Limited, a subsidiary of Sanlam Life, on an arms length basis and in the
ordinary course of its business, by way of subscription for seven year
cumulative preference shares in the share capital of BEE SPV Co with a variable
dividend rate equal to 75% of Absa Bank Limited`s ("ABSA") prime lending rate;
and
- bridging finance of up to R600 million will be provided by Sanlam Life
Insurance Limited ("Sanlam Life") for a nine month period at ABSA`s prime
lending rate less 75 basis points.
Santam retains the right to refinance the bridging finance, or to procure the
refinancing thereof from other sources, failing which Sanlam Private Equity, a
division of Sanlam Life, will be entitled to convert the loan into participating
preference shares in the share capital of BEE SPV Co.
The conversion will be at market related private equity funding terms, which
will entitle it, inter alia to, participate in a portion of the benefit derived
by BEE SPV Co from the Santam shares held by BEE SPV Co.
4. financial effects of the scheme
4.1 There are no financial effects on Santam as a result of implementation of
the scheme.
4.2 The cash consideration of R82.00 per Santam share represents a discount of
10.2% to the volume weighted average price of R93.98 per Santam share over the 5
trading days ending on 23 February 2007, being the last date prior to
finalisation of the announcement on SENS on 27 February 2007 less the dividend
of R2.62 per Santam share paid to shareholders on Monday 26 March 2007 (the "ex
dividend market price").
4.3 Santam recognises that broad-based black ownership is a business imperative
in South Africa and that a level of facilitation is required in order to enable
black ownership to be effected. The disposal by existing Santam ordinary
shareholders of 10% of Santam`s issued ordinary shares at a discount of 10.2% to
the ex dividend market price, equates to a dilution of approximately 1% of
Santam`s market value. Santam recognises that further facilitation would be
required to increase the commercial viability of the transaction and foresees
that further dilution of up to 1.8% of Santam`s market value may be incurred
over time to facilitate the transfer of value to BEE SPV Co. An analysis by the
advisers to Santam of facilitation norms in BEE transactions confirm that an
average dilution of 2.8% of market value is incurred for transactions achieving
10% BEE ownership. Santam`s intention is to not exceed this market norm.
5. Salient dates and times
2007
Circular posted to Shareholders on Monday 26 March
Notice of scheme meeting and Order of Court convening the
scheme meeting published in the press, Monday 26 March
The repurchase offer and the Sanlam offer open at
09:00, on Monday 26 March
Last day to trade in Santam shares in order to participate
in the repurchase offer and the Sanlam offer, on* Friday 13 April
Last day to trade in Santam shares in order to be
recorded in the register to vote at the scheme
meeting, on* Monday 16 April
The repurchase offer and the Sanlam offer close at
12:00, on* Friday 20 April
Consideration settlement date for the repurchase offer
and the Sanlam offer, on* Monday 23 April
Scheme voting record date, on* Monday 23 April
Last day to lodge proxy forms for the scheme meeting by
10:00, on* Tuesday 24 April
Last day to lodge proxy forms for the general meeting by
11:00, on* Tuesday 24 April
Scheme meeting to be held at 10:00, on* Thursday 26 April
General meeting to be held at 11:00 (or after conclusion
of the scheme meeting, if later), on* Thursday 26 April
Results of the scheme meeting and general meeting
released on SENS, on* Thursday 26 April
Results of the scheme meeting and general meeting
published in the press, on* Monday 30 April
Court hearing to sanction the scheme, on* Monday 7 May
If the scheme is sanctioned:
Order of Court sanctioning the scheme registered by the
Registrar, on* Tuesday 8 May
Announcement regarding the sanctioning of the scheme
released on SENS, on* Tuesday 8 May
Announcement regarding the sanctioning of the scheme
published in the press, on* Wednesday 9 May
Last day to trade in Santam shares in order to become a
scheme participant, on* Friday 11 May
Santam shares will trade "ex" the scheme under the new
ISIN ZAE000093779, on* Monday 14 May
Scheme consideration record date on which scheme
participants must be recorded in the register to
receive the scheme consideration, on* Friday 18 May
Operative date of the scheme from commencement of
trade, on* Monday 21 May
Date on which the scheme consideration will be made
available to the scheme participants, on* Monday 21 May
*Expected dates
Upon the scheme becoming operative, dematerialised scheme participants will have
their shareholdings transferred to BEE SPV Co and the scheme consideration
credited to them in terms of the custody agreement entered into between such
scheme participants and their CSDP or broker. The scheme consideration is
expected to be paid to the accounts of the scheme participants or their CSDP or
broker on Monday 21 May 2007. Certificated scheme participants who have
surrendered their documents of title on or before 12:00 on Friday 18 May 2007
will receive the scheme consideration within five business days of Monday 21 May
2007. Certificated scheme participants who have not surrendered their documents
of title before Friday 18 May 2007 will receive the scheme consideration within
five business days of receipt of such documents of title by the transfer
secretaries.
Notes:
1. All times shown in this document are South African local times.
2. Any material amendments to the dates and times will be released on SENS and
published in the press.
3. Shareholders should note that, as trade in Santam shares on the JSE is
settled through STRATE, settlement for trade takes place five business days
after such trade. Therefore, Santam shareholders who acquire Santam shares on
the JSE after Monday 16 April 2007 will not be eligible to vote at the scheme
meeting or the general meeting.
4. Dematerialised scheme members and shareholders, other than own-name
dematerialised scheme members and shareholders, must provide their CSDP or
broker with their instructions for voting at the scheme meeting and general
meeting by the cut-off time and date advised by the CSDP or broker for
instructions of this nature.
5. No dematerialisation or rematerialisation of existing Santam shares will take
place between Friday 11 May 2007 and Friday 18 May 2007.
6. Proxy forms for the scheme meeting (pink) may also be handed to the
chairperson of the scheme meeting by no later than 10 minutes before the
commencement of the scheme meeting.
7. All fractions will be adjusted by the application of the rounding principles
therefore no fractions will be paid out.
6. The scheme meeting
The scheme will be put to a vote at the scheme meeting to be held at 10:00 on
Thursday 26 April 2007, in the Auditorium, Santam Head Office, 1 Sportica
Crescent, Tyger Valley, Bellville or such other date as shall be released on
SENS and notified in the press.
Section 311 of the Companies Act requires the approval of a majority
representing not less than three-fourths (75%) of the votes exercisable by all
Santam shareholders, other than the Santam subsidiary, recorded in the register
on the voting record date, present and voting, either in person or by proxy, at
the scheme meeting
Scheme members who do not wish to support the scheme will be given an
opportunity to state their views at the scheme meeting.
7. General meeting
In terms of the funding arrangements between BEE SPV Co and its financiers,
Santam has the right to refinance the bridging finance, on the passing of the
requisite shareholder approvals, if required, and the promulgation of the
relevant proposed legislation to legalise such funding, or to procure the
refinancing of the bridging finance from other sources.
Santam has therefore resolved to obtain the necessary shareholder approvals,
subject to and in anticipation of the relevant proposed legislation being
promulgated, and has proposed that the resolutions to effect the above, be
passed.
A general meeting will be held at which shareholders will be requested to
consider and, if deemed pafit; approve the resolutions referred to above.
This meeting will be held at 11:00 (or immediately after the preceding scheduled
scheme meeting, whichever is later), on Thursday 26 April 2007 in the
Auditorium, Santam Head Office, 1 Sportica Crescent, Tyger Valley, Bellville, or
at a later time or date to which the general meeting may be adjourned or
postponed.
8. Documentation
A circular providing further information on the scheme and the general meeting,
containing, inter alia:
- a notice of the scheme meeting;
- a notice of the general meeting;
- a form of proxy for the scheme meeting;
- a form of proxy for the general meeting; and
- a form of surrender,
will be posted to Santam shareholders on 26 March 2007.
Santam Limited
Bellville
26 March 2007
Merchant bank and transaction sponsor to Santam
RAND MERCHANT BANK
A division of FirstRand Bank Limited
Sponsor to Santam
Investec Bank Limited
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor to Santam in Namibia
SIMONIS STORM Securities
Attorney to Santam and the scheme
JOWELL GLYN & MARAIS
Date: 26/03/2007 08:59:55 Produced by the JSE SENS Department.
